Breaking Boundaries LIVE 2016: Innovation and Technology
Food and Drink Business’ ‘Breaking Boundaries LIVE Forum’ was held at the Royal Randwick Racecourse on Thursday 4th August 2016. The event connected people from a wide range of areas within the Australian food and beverage industry to talk about new product innovations, new technologies and branding strategies, as well as key considerations for making the most of export opportunities. As I research non-alcoholics drinks in Australia, I will give focus to the beverages industry.
The story of the growth of an innovative Australian beverage company, MADE Group, captures the essence of the day well.
MADE Group begins with the launch of ‘Nutrient Water’
In the morning, MADE Group’s Luke Marget narrated the story of the company’s beginnings in 2005 in Melbourne, Australia, with the launch of ‘Nutrient Water’. Nutrient Water created a new category in the non-alcoholic drinks space, a product which is a cross between water and a sports drink. This was the first product of its kind on the Australian market and tapped into the ubiquitous health and wellness trend. However, as consumer preferences changed and the anti-sugar movement gained momentum, the company sought to diversify by launching Cocobella coconut water in September 2010.
Cocobella jumps on the coconut water band wagon early
Cocobella sought to differentiate its products through the selective use of ingredients, quality packaging and by offering a broad product selection. MADE Group sources its coconut water from Thailand; additionally, the company also offers PET packaging for its coconut water products which, Mr Marget pointed out, major competitors have not been able to do. Today Cocobella’s diverse product range includes straight coconut water, chocolate flavoured coconut water and coffee ‘coco latte’ coconut water, which was launched in May 2016 as a dairy-free coffee alternative.
Industry sources indicate future growth of coconut water in Australia will continue to be driven by such innovations which blur the line between coconut water and other beverages. Examples of this include carbonated coconut water (which has launched overseas, seen for example in the US) as well as the addition of functional ingredients, such as Raw C’s protein coconut water drink which launched in August 2015. Euromonitor International forecasts the growth of coconut water in Australia will remain strong over the next few years, with sales anticipated to increase at a value CAGR of 26% in current terms over 2016-2021, as manufacturers continue to invest heavily in new product development.
‘Impressed Juices’ and extended shelf life and high pressure processing
In June 2015, MADE Group launched ‘Impressed Juice’, a cold-pressed juice range made from 100% Australian grown vegetables and fruits. According to Mr Marget, this launch was in response to the decline seen in the Australian juice market over the last few years. Euromonitor International data shows that a negative volume CAGR of 8% was recorded in 100% Juice in Australia over the 2011-2016 period. A key issue in the market has been the anti-sugar movement among consumers. However, concerns over the lack of quality produce used, as well as the use of imported ingredients, have also been key issues. Impressed Juice was launched with this in mind, offering consumers a product which uses fresh local produce combined with a cold-press process.
The launch of ‘Impressed Juice’ was enabled by High Pressure Processing, the process of cold pasteurising foods at very high levels of pressure to remove bacteria, preserve flavour and nutrients and provide an extended shelf life. Extended shelf life and high pressure processing has also enabled MADE Group to deliver major supermarket distribution as well as the opportunity to export its products. This new technology has been a game changer. The shelf life of cold-pressed juice is typically two days; however, with high pressure processing a shelf life of 21 days is now possible. This opens up a realm of new opportunities. The next step for MADE Group is to look at exporting its products. Luke indicated the company will look to launch its products in Malaysia, China, Singapore and Taiwan over the next few months, proving that investing in technology is an important means of supporting a company’s growth.
Positive prospects for MADE Group’s exports
Company sources suggest that MADE Group’s exports to Asia, which include PET-bottled milk in addition to juice, will generate 20 per cent of the company’s sales by 2018. Mr Marget has publicly commented ‘We think that’s achievable given the interest we’ve had.’ Euromonitor anticipates markets with the highest growth in juice will be most receptive to these new products. For example, juice in Malaysia will see 6% volume CAGR growth between 2016 and 2021, indicating strong consumer interest in juice products. Chinese consumers in particular are anticipated to welcome Australian imported juice products. This is the result of a food safety scare in October 2014 involving Taiwan’s Ting Hsin International Group, the number two player in Chinese juice, which severely affected local consumers’ trust in the company. Additionally, Chinese consumers, especially young, aspirational consumers, are looking for healthier products which will have a positive impact on their wellbeing, such as cold-press juice. This, combined with the fact that domestic players have been slow to enter the premium juice segment in China in a substantial way, indicates strong growth potential for MADE Group’s products in this market.